Papa John's says North American same-store sales - a key measure of the company's performance - fell 10.5 percent in July, after falling a steeper-than-anticipated 6.1 percent in the second quarter.
Papa John's has hired new agencies - Endeavor Global Marketing on creative and Weber Shandwick's Powell Tate on PR, to help it try to mitigate the situation.
In a statement, Schnatter said the results show the deterioration of the company's financial performance under CEO Steve Ritchie, but that it is trying to blame him for the problems.
The Louisville-based pizza chain told Wall Street analysts to expect North American sales to be down 7 to 10 percent in 2018.
Before resigning as chairman, Schnatter had already stepped down as the company's CEO a year ago after facing criticism for saying that NFL players protesting the national anthem caused sales to decline for Papa John's, a sponsor of the NFL.
Schnatter stepped down as Papa John's CEO last January. And of course, the images of that one person it depended on for so long are hastily being wiped from marketing materials such as pizza boxes and logos. About 80 percent of the company's 3,400 restaurants in North America are owned by franchisees. And Ritchie used two of the industry's buzzwords, saying the brand needs to do better to reach, that's right, millennials and Gen Z. A special committee of the board of directors will oversee an outside auditor's investigation into Papa John's culture, including the company's existing processes, policies and systems related to diversity and inclusion.
For Papa John's, value also really matters, with pizza chains seemingly constantly offering some price-focused deal or another pretty much all of the time. He said in a statement that he is 'not going away'. Pizza Hut replaced Papa John's as the NFL's official pizza sponsor last February.
Papa John's shares are down more than 20% so far this year.
'Sometimes the greatest opportunities happen in the most inopportune times, ' Ritchie said.
In an interview with The Associated Press last week, Schnatter said the chain's troubles reflect its move away from marketing its 'roots, ' including his disappearance from TV and radio ads starting late a year ago.
Revenue was down by 6.2 percent to $408 million and net income fell by just under 50 percent to $11.8 million, or 36 cents per share, down from $23.5 million, or 65 cents per share in the quarter ended June 25, 2017. "Franchisees and partners have expressed overwhelming support for ... our decision to remove John as brand spokesperson".